The Indian economy is predicted to grow faster in the second quarter of FY24, thanks to improved industrial performance. According to economists and experts, GDP growth for the year ending November 30 will be in the range of 6.8 percent to 7.2 percent. Previously, the Reserve Bank of India (RBI) forecasted 6.5 percent growth in Q2 FY24.

According to a Reuters poll, the third-largest Asian economy is expected to grow 6.8 percent in the July-September quarter compared to the same period last year. GDP grew 7.8 percent in the April-June quarter. In the second quarter of FY23, it was 6.3%.

"The poll's consensus forecast is slightly higher than the Reserve Bank of India's projection of 6.5 percent for the quarter." However, it falls short of India's economy's 7.8 percent growth in the previous quarter, which was bolstered by a favorable comparison with a low base from the previous year, according to Reuters surveys.

The RBI Bulletin's November State of the Economy Report stated that real GDP growth was on track to exceed the central bank's anticipated pace of 6.5 percent for the second quarter. This upbeat prognosis is supported by the solid and broad bottom-line growth seen in business earnings.

"In India, GDP estimates for the second quarter (Q2) of 2023-24 will be published at the end of this month." "There is widespread agreement, supported by forecasts, that real GDP growth will exceed the Reserve Bank of India's (RBI) projection of 6.5 percent for Q2 FY24," the research said. Profitability has increased significantly in industries such as oil and gas, autos, and construction.

"In India, the momentum of the change in GDP is sequentially expected to be higher in Q3:2023-24, with festival demand remaining ebullient," said the report's authors. RBI Governor Shaktikanta Das has stated that the economy is projected to grow at a faster pace.

"Looking at the momentum of economic activity and several early data points and indicators that have emerged, I can confidently say that the second quarter GDP figures, expected to be released at the end of November, in all probability will surprise everyone on the upside," Das said at a recent conference.

What economists anticipate 

Economists forecast that GDP will expand at a 6.8-7.0 percent annual rate in the second quarter of 2023-24. Some have even suggested that GDP may reach 7.2 percent.

According to ICRA, year-on-year (YoY) GDP growth will decelerate sequentially to 7.0 percent in Q2 FY2024 from 7.8 percent in Q1 FY2024. GVA growth is expected to slow to 6.8 percent in Q2 FY2024, down from 7.8 percent in Q1 FY2024, driven by the services sector (to +8.2 percent from +10.3%) and agriculture (to +1.0 percent from +3.5 percent), with industry improving (to +6.6 percent from +5.5 percent).

"A normalising base and an erratic monsoon are expected to result in a sequential slowing of GDP growth to 7.0 percent in Q2 FY2024, down from 7.8 percent in Q1 FY2024." Regardless, we expect GDP growth to exceed the Monetary Policy Committee's (MPC) October 2023 prediction of 6.5 percent," said Aditi Nayar, Chief Economist, Head-Research & Outreach, ICRA.

"Looking ahead, uneven rainfall, narrowing differentials with year-ago commodity prices, a possible slowdown in Government capex momentum as we approach Parliamentary Elections, weak external demand, and the cumulative impact of monetary tightening are likely to translate into lower GDP growth in H2 FY2024," she added. As a result, we maintain our FY2024 GDP growth estimate of 6.0 percent, which is lower than the MPC's fiscal projection of 6.5 percent."

According to SBI experts, quarterly GDP growth for the second quarter of FY24 is estimated to be in the range of 6.9 percent to 7.1%. This will firmly drive the FY24 growth rate over the RBI's forecast of 6.5 percent, it added. Higher capital investment by the federal government and states is likely to have an impact on overall growth, according to the report.